How environmental uncertainty shapes tax aggressiveness: the moderating role of governance and ownership in an emerging economy

This study investigates the impact of environmental uncertainty on tax aggressiveness and the moderating roles of corporate governance and ownership structure in an emerging economy in a region with high environmental uncertainty due to its geopolitical instability and volatile regional environment. Using data from 74 Jordanian firms listed on the Amman Stock Exchange over the period 2015–2022 and employing fixed-effect regression models, we find no statistically significant aggregate relationship between environmental uncertainty and tax aggressiveness. However, sector-level analysis reveals different patterns: industrial firms tend to reduce tax aggressiveness during periods of increased uncertainty, while service firms increase tax aggressiveness during periods of increased uncertainty. The results of this research highlight the importance of sectoral context in explaining firms’ tax responses to uncertainty. Some governance and ownership characteristics also influence tax behavior under uncertainty. While institutional and concentrated ownership are associated with lower tax aggressiveness in stable conditions, their effectiveness is weak during uncertain periods, potentially enabling greater opportunism. In contrast, CEO duality and family ownership appear to stabilize tax behavior during such periods. Other governance attributes have no significant moderating effects.